Rabobank Report: Dramatic Growth in Bulk Wine Exports Has Shifted $1.4 Billion Along Wine Supply Chain

SUPPLIERS SEEKING LOWER DISTRIBUTION AND SUPPLY CHAIN COSTS WILL FURTHER DRIVE BULK WINE TRADE

News provided by

Jan 19, 2012, 10:57 ET

NEW YORK, Jan. 19, 2012 /PRNewswire/ -- A new report from Rabobank's global Food & Agribusiness Research and Advisory department examines the dramatic growth in the bulk wine trade globally over the past two decades, and implications for wine suppliers as the segment continues to grow.

"The Incredible Bulk: the Rise in Global Bulk Wine Trade" details factors that have driven the share of bulk wine exports to nearly double over the past decade at the expense of bottled wine shipments, particularly among New World suppliers – with bulk format now approaching half of total export volumes.

Rabobank says in the report that the democratization, commoditization, innovation, and oversupply of wine, along with currency rates and changing trade flows, have changed both the conventional supply chain model and the distribution of value along that chain.

A challenging retail environment, a decade of oversupply, and other factors have constrained supplier pricing power and access to distribution in key import markets.
Among popular premium wines, the convergence in New World wine quality has sharpened the focus on suppliers' cost competitiveness.
Besides grape production costs, import duties and relative exchange rates are key competitive determinants, with exchange rate fluctuations most detrimental to Australian suppliers and most beneficial to U.S. suppliers.
Cost savings are the overriding driver of shipping wine in bulk, stripping $140 million in transport, duty, packaging and associated costs from supply chains of New World producers.
The shift in trade to bulk shipments equates to well over $1 billion generated in destination markets vs. at the production source.

Rabobank forecasts that bulk wine shipments will grow further, despite tightened global supply, as suppliers continue to seek low cost supply chain and distribution solutions. But, "suppliers who cannot compete on a commodity product level, due to high currency rates or cost structures, will need to emphasize product innovation and brand differentiation in order to survive."

Rabobank is a global financial services leader providing wholesale and retail banking for the food and agricultural industry, asset and investment management, leasing, real estate services, and renewable energy project financing. Founded over a century ago, Rabobank today is one of the largest and safest banks in the world, with more than $850 billion in assets and operations in over 40 countries. In North America, Rabobank is a premier financial services provider to the corporate food, beverage, agriculture and agribusiness industries. www.Rabobank.com

SOURCE Rabobank